The British Pound Approaches Support

The British Pound has been selling off rather sharply over the past 2 months but is now approaching a significant area of support. If you measure the rally from July 2001 to the high made in 2007, you will see that we are now at the 50% retracement level. The Pound is also approaching the low that was made in 2005 which turned out to be a major support area. It will be interesting to see how this currency handles this significant zone of support in the weeks to come.

Potential Bottom In The British Pound

Above is a weekly chart of the British Pound. I'll be watching this currency over the next few days for a possible buying opportunity.

As you can see in the above chart the British Pound has been trending higher since March 2006. Over the last 2 months the B-Pound has been selling off which in my opinion is a pullback to buy.

Notice how the Pound is sitting on its 30 week moving average. This moving average has provided excellent support and resistance for this currency many times over the last 3 years and that is why I use it.

In addition to the moving average we also have the British Pound in a time window for a cyclical low. On average this currency tends to make bottoms about every 16 weeks. I pointed out each cyclical low with red arrows.

In the lower pane is an oscillator that has done a good job at timing the lows since this uptrend began. As you can see the oscillator is in the buy zone which suggests a possible buying opportunity.

Over the last few days the British Pound has been showing strength compared to the Swiss Franc and the Euro. Keep an eye on the Pound, we may see a rally coming in the near future.